You want to buy a $160,000 home. You plan to pay as a down payment, and take out a 30 year loan at 4.65% interest for the rest. The bank will charge 2 points on the amount financed. a) What is the amount of the down payment? LA

You want to buy a $160,000 home. You plan to pay as a down payment, and take out a 30 year loan at 4.65% interest for the rest. The bank will charge 2 points on the amount financed. a) What is the amount of the down payment? LA

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

You want to buy a $160,000 home. You plan to pay 5%
as a down payment, and take out a 30 year loan at
4.65% interest for the rest. The bank will charge 2
points on the amount financed.
a) What is the amount of the down payment?
b) How much is the loan amount going to be?
$
c) What will be the amount charged for 2 points?
d) Find the amount of the monthly payment.
$

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